Pros (PRO) 2025 Conference June 04, 2025 02:00 PM ET Speaker0 Great. Okay. Well, good afternoon, everybody. Thanks for joining us for day two of Baird's global consumer technology and services conference. I'm Rob Oliver. I'm one of the software analysts here at Baird, and I follow PROS Holdings. It's a pleasure to have Stefan Schultz, who's the CFO, long time CFO of PROS Holdings here, as well as Belinda Overtipu, who does investor relations. Speaker1 Thank you. Speaker0 It's nice to see you both. Speaker1 ...

Summary of PROS Update / Briefing May 14, 2025 Company Overview - **Company**: PROS - **Industry**: AI-driven software solutions, particularly in pricing and revenue management Key Points and Arguments AI Innovations and Product Development - PROS is launching **50 new AI agents** aimed at transforming productivity and business outcomes by combining large language models with mathematical models [10][12] - The concept of **"every person in the company will be a manager"** is introduced, emphasizing the role of AI agents in enhancing individual productivity [10] - AI agents will assist in various tasks, such as sales processes, by autonomously managing renewals and pricing strategies [12][13] - The focus on **customer co-development** of products highlights the collaborative culture within PROS [8][14] Market Demand and Volatility - Market volatility, including factors like inflation and tariffs, drives demand for PROS solutions, as companies seek to adapt quickly to changing conditions [17][22] - PROS technology enables companies to execute pricing strategies rapidly, providing a competitive edge during volatile periods [19][20] Financial Performance and Guidance - PROS reported a **positive free cash flow** in Q1 for the first time in a long time, indicating strong financial health [23] - The company anticipates an **accelerating second half** of the year based on strong bookings in both subscription and services [24] Strategic Focus and Market Positioning - The new CEO emphasizes the need to **amplify brand awareness** and enhance demand generation efforts, particularly through partnerships [30][32] - PROS aims to leverage its **partner ecosystem** to increase market penetration and capitalize on opportunities within the CRM landscape [52][54] Travel Industry Insights - Airlines are increasingly focused on **offer optimization** and enhancing customer experiences, which aligns with PROS' capabilities [35][37] - The company is witnessing a resurgence in demand as airlines recover from the impacts of COVID-19, with a focus on technology that drives efficiency without increasing headcount [44][45] Competitive Landscape - PROS holds a **leadership position** in the CPQ market, differentiating itself with a headless commerce architecture that is adaptable across various CRM systems [88][90] - The competitive environment is seen as improving, with PROS positioned to benefit from the transition away from traditional CRM solutions [89][91] AI Adoption and Internal Efficiency - The internal adoption of AI is extensive, with a focus on using AI to enhance operational efficiency and scale without increasing headcount [75][78] - The leadership team is committed to embedding AI across all functions, which is expected to yield significant future benefits [80][82] Revenue Model and Stability - PROS' revenue model is largely insulated from fluctuations in passenger volumes in the airline industry, with only about **1% of revenue** directly impacted by volume [86] - The company has a tiered pricing structure that provides stability even during downturns in the airline sector [86] Additional Important Insights - The emphasis on **responsible AI** and building trust in AI solutions is crucial for wider adoption among B2B customers [57][59] - The company is exploring opportunities to restructure its capital to enhance flexibility and support growth initiatives [66][68] This summary encapsulates the key insights from the PROS update, highlighting the company's strategic direction, market positioning, and financial outlook.

Group 1 - The stock of Pros Holdings (PRO) closed at $16.87, reflecting a 2.1% gain over the past four weeks, with a mean price target of $28.86 indicating a potential upside of 71.1% [1] - The average price targets from analysts range from a low of $22 to a high of $38, with a standard deviation of $5.98, suggesting a variability in estimates; the lowest estimate indicates a 30.4% increase, while the highest suggests a 125.3% upside [2] - Analysts show a consensus that PRO will report better earnings than previously estimated, which is a positive indicator for potential stock price increases [4][11] Group 2 - The Zacks Consensus Estimate for the current year has increased by 18.9% over the last 30 days, with three estimates moving higher and no negative revisions [12] - PRO holds a Zacks Rank 2 (Buy), placing it in the top 20% of over 4,000 ranked stocks based on earnings estimates, indicating a strong potential for upside in the near term [13] - While price targets may not be entirely reliable, the direction they imply appears to be a good guide for potential price movements [13]

Group 1 - PROS Holdings (NYSE: PRO) has experienced poor stock performance this year due to increased investor uncertainty related to its exposure to the airline industry, which is currently under demand pressure [1] - The company's Q1 results have not been detailed in the provided text, but the context suggests that they may be impacted by the challenges faced by the airline sector [1] Group 2 - The article does not provide any specific financial metrics or performance indicators for PROS Holdings or the airline industry [1]

Core Insights - Pros Holdings (PRO) reported revenue of $86.32 million for the quarter ended March 2025, marking a year-over-year increase of 7% and exceeding the Zacks Consensus Estimate of $85.43 million by 1.04% [1] - The company's earnings per share (EPS) for the same period was $0.13, compared to $0.04 a year ago, aligning with the consensus EPS estimate [1] Revenue Breakdown - Total subscription, maintenance, and support revenue reached $73.56 million, surpassing the average estimate of $73.20 million by analysts, reflecting an 8.3% year-over-year increase [4] - Subscription revenue was reported at $70.83 million, exceeding the average estimate of $70.50 million, with a year-over-year change of 10.1% [4] - Maintenance and support revenue was $2.73 million, slightly above the average estimate of $2.70 million, but showed a significant year-over-year decline of 24.1% [4] - Services revenue amounted to $12.76 million, exceeding the average estimate of $12.24 million, with a minimal year-over-year change of 0.1% [4] Stock Performance - Pros Holdings shares have returned -11.1% over the past month, in contrast to the Zacks S&P 500 composite's -0.7% change [3] - The stock currently holds a Zacks Rank 3 (Hold), indicating potential performance in line with the broader market in the near term [3]

Group 1 - Pros Holdings reported quarterly earnings of $0.13 per share, matching the Zacks Consensus Estimate, and showing an increase from $0.04 per share a year ago [1] - The company posted revenues of $86.32 million for the quarter ended March 2025, exceeding the Zacks Consensus Estimate by 1.04%, and up from $80.69 million year-over-year [2] - Pros Holdings has surpassed consensus EPS estimates three times over the last four quarters and topped consensus revenue estimates four times during the same period [2] Group 2 - The stock has underperformed, losing about 22.2% since the beginning of the year, compared to the S&P 500's decline of 5.3% [3] - The current consensus EPS estimate for the upcoming quarter is $0.12 on revenues of $89.68 million, and for the current fiscal year, it is $0.61 on revenues of $360.67 million [7] - The Computer - Software industry, to which Pros Holdings belongs, is currently in the top 33% of Zacks industries, indicating a favorable outlook compared to the bottom 50% [8]

Pros (PRO) Q1 2025 Earnings Call May 01, 2025 04:45 PM ET Company Participants Belinda Overdeput - Senior Director - IRAndres Reiner - President and CEOStefan Schulz - CFOScott Berg - Managing DirectorMatthew Kikkert - Equity Research AssociateNehal Chokshi - Managing Director Conference Call Participants Zane Meehan - Associate Analyst, Equity Research Operator Welcome to the PROS Holdings First Quarter twenty twenty five Earnings Conference Call. At this time, all participants are in a listen only mode. A ...

Financial Data and Key Metrics Changes - The company reported a trailing twelve month recurring calculated billings growth of 14% year over year, marking the strongest performance in ten quarters [6] - Subscription revenue reached $70.8 million, up 10% year over year, while total revenue was $86.3 million, up 7% year over year, both exceeding guidance [20] - Free cash flow improved by $6 million year over year to $1.1 million, despite Q1 typically being a seasonally high cash used quarter [19][22] - Non-GAAP earnings per share was $0.13, also exceeding guidance [23] Business Line Data and Key Metrics Changes - Recurring revenue constituted 85% of total revenue, an increase from 84% in Q1 of the previous year [20] - Non-GAAP subscription gross margin improved to 81%, an increase of over 160 basis points year over year [21] - Non-GAAP services gross margin was 13%, improving by over 460 basis points year over year [21] Market Data and Key Metrics Changes - The company saw strong demand in the travel sector, winning contracts with two of the top seven US carriers [12] - The ongoing market volatility has led to increased adoption of AI-powered pricing and selling solutions, with companies recognizing the need for real-time data-driven decisions [9][10] Company Strategy and Development Direction - The company is focused on enhancing its AI-powered pricing and selling solutions, which are deemed mission-critical in volatile markets [6][14] - The upcoming Outperform conference will showcase the latest AI innovations, emphasizing the integration of AI with customer experience [14] - The company plans to increase investments in selling and marketing in the second quarter [23] Management's Comments on Operating Environment and Future Outlook - Management acknowledged the complex selling environment due to macroeconomic uncertainties but noted strong execution and demand across B2B and travel sectors [5][34] - There is confidence in the company's ability to navigate market volatility, with an increase in inbound demand and SDR-based meetings booked [35] - The company maintains its full-year guidance despite positive momentum, citing macro risks as a consideration [62] Other Important Information - The company announced the planned retirement of its CEO, with Jeff Cotton set to take over as president and CEO [15][16] - The company exited Q1 with $170 million in cash and investments [22] Q&A Session Summary Question: Insights on the travel segment's momentum - Management noted improvements in travel bookings and highlighted innovations in offer optimization that resonate with airlines [30][31] Question: Impact of current macro conditions on business - Management indicated that the complex selling environment has not negatively impacted demand, with companies accelerating initiatives [34][35] Question: Clarification on gross margin improvements - Management explained that efficiencies in cloud solutions and automation in services have driven better gross margins [40][41] Question: Customer behavior regarding implementations - Management reported no significant changes in demand patterns, with strong demand for CPQ solutions [44] Question: Revenue guidance breakdown - Management provided a split of approximately 40% new customers and 60% existing customers, expecting this mix to remain consistent [51] Question: Go-to-market changes contributing to improved bookings - Management highlighted improvements in sales execution, marketing function, and demand generation as key contributors to better bookings [55]

PROS Holdings, Inc. Q1 2025 Investor Presentation Updated May 1, 2025 ir@pros.com © 2025 PROS, Inc. All rights reserved. Confidential and Proprietary. Disclaimer / Forward-Looking Statements This presentation contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including statements about our financial outlook; expectations; ability to achieve future growth and profitability goals; ability to achieve "Rule of 40"; management's confidence and optimism ...

Revenue Performance - Subscription revenue increased by 10% to $70.83 million for Q1 2025 compared to Q1 2024, contributing to a total revenue increase of 7% to $86.32 million[62][69] - Recurring revenue accounted for 85% of total revenue, with gross revenue retention rates remaining above 93%[63] - Maintenance and support revenue decreased by 24% to $2.73 million, attributed to customer churn and migration to cloud solutions[70] - Services revenue remained stable at $12.76 million, with gross profit percentages for services improving to 8% from 3%[71][74] Profitability and Margins - Subscription gross profit margin improved to 79% in Q1 2025 from 77% in Q1 2024, while total gross profit margin increased to 68% from 64%[64] - The net loss decreased significantly to 4% of total revenue in Q1 2025 from 14% in Q1 2024[68] Cash Flow and Liquidity - Operating cash flow improved to $1.2 million in Q1 2025, compared to cash used of $4.6 million in Q1 2024, due to reduced net loss and strong collections[65] - Net cash provided by operating activities for Q1 2025 was $1.2 million, a significant improvement from a net cash used of $4.6 million in Q1 2024[87] - Cash and cash equivalents stood at $160 million as of March 31, 2025, with working capital increasing to $55.5 million[83] - The net change in cash, cash equivalents, and restricted cash for Q1 2025 was a decrease of $1.96 million, compared to a decrease of $12.32 million in Q1 2024[86] Operating Expenses - Total operating expenses remained relatively stable at $62.22 million in Q1 2025, with selling and marketing expenses increasing by 6%[75] Tax and Financial Provisions - The effective tax rate was (21)% for Q1 2025, reflecting foreign income and withholding taxes, with a significant increase in the income tax provision[81] Financing Activities - Net cash used in financing activities for Q1 2025 was $3.1 million, a decrease from $7.3 million in Q1 2024, attributed to lower tax withholding payments related to employee share-based awards[89] Debt and Credit Agreements - As of March 31, 2025, there were no outstanding borrowings under the Credit Agreement, with $0.4 million of unamortized debt issuance costs included in prepaid and other current assets[92] - The Credit Agreement requires maintaining a cash balance of at least $10 million, which is included in restricted cash[93] Market Risks and Financial Condition - There are no off-balance sheet arrangements that materially affect the company's financial condition[90] - The company has not experienced any material changes in exposure to market risks[96] Accounting and Reporting - The company’s financial statements are prepared in accordance with GAAP, requiring estimates and assumptions that could affect reported amounts[95]